Frankfurt - Rare Volkswagen shares commanded giddying prices Monday on the Frankfurt Stock Exchange after Porsche announced it was within sight of
75-per-cent control of Europe's biggest carmaker.

The stock traded at 356 euros by late morning, up 69 per cent from Friday. At one point it had been up 90 per cent, and Germany's N-TV news television said the gain had bolstered Frankfurt's DAX stock index by 200 points.

Analysts said it was unlikely to be luxury car-maker Porsche's own purchases that were driving the price, although Porsche revealed Sunday it had advanced its stake from 35 to 42.6 per cent of Volkswagen Group. Additionally, it has captured options for an additional 31.5 per cent of Volkswagen.

Short-sellers have been caught unprepared by Porsche's extraordinary capture of those options. It has meant that, rather than sliding lower with the market, Volkswagen's shares have become hard to obtain.

"This is a massive short squeeze," said one broker.

Another broker, for DZ Bank, said his bank had put a "buy" recommendation on the stock for those willing to speculate, since the sky was the limit as the squeeze tightened, with hardly any uncommitted shares left.

DZ Bank set a target of 911 euros (1,135.24 dollars) for the stock, which has been as low as 143.90 euros in the past 12 months.

Porsche says the options contracts ensure it will own 74.1 per cent of Volkswagen by next year. A stake of just over 20 per cent held by the German state of Lower Saxony is not for sale, leaving little over 5 per cent uncommitted.

Porsche stock meanwhile slumped 12 per cent with the rest of the market to 40.29 euros.

The European Union is expected this week to announce fresh action to force Germany to repeal legal provisions that give Lower Saxony veto rights at Volkswagen meetings.

Such a move would seal the Porsche takeover as final. (dpa)